Daily Market Report 20/06/2013

Wednesday was always going to be braced for Fed Reserve Chairman Ben Bernanke’s announcement so any data from earlier in the day or indeed earlier in the week, took a back seat. Global markets have been pre-occupied with the Fed’s stance on the US quantitative easing program simply due to the fact that the flow of ‘cheap’ money in the markets has allowed substantial growth in both emerging and established markets. In short, if the Fed reduces their QE program, risk appetite will wain and global markets will, in the short term at least, suffer.

Despite analysts not being able to agree on the Fed forecast, Bernanke finally stated that the US QE would be tapered down towards the end of 2013. Immediately the US dollar gained over 2 cents on the pound and 1.5 cents against the euro. The reaction to the announcement has already seen the Japanese yen weaken significantly losing over 3.5% against dollar. This represents another big swing in global investor sentiment and risk appetite.
Risk appetite will also be adversely affected by the disappointing Flash Manufacturing PMI from China coming in at 48.3 rather than an expected 49.1.

In other news, New Zealand failed to meet their GDP expectations growing only 0.3% in Q1 falling short of the 0.5% forecast. This has resulted in the NZ dollar falling over 1.5% overnight.

Thursday’s calendar is also busy leaving little time for markets to absorb the aforementioned information. Retail Sales from the UK for May, US initial jobless claims and euro zone consumer confidence all make an appearance. However the German and overall euro zone manufacturing and services data will most likely steal the lime light. The next few trading sessions will be key in assessing the true value of the dollar; it will be interesting to see if risk appetite fights back despite Bernanke’s decision. Although it would appear for the short term, dollar buyers have missed the boat.

Key Announcements:

9.30am – GBP – Retail Sales (YoY) (May): Expected to fall to 0.2%.

13.30pm – USD – Initial Jobless Claims (Jun 15): Expected to increase to 340,000.

13.30pm – USD – Markit Manufacturing PMI (Jun): Expected to improve to 52.8.

15.00pm – EUR – Consumer Confidence (Jun): Expected to improve to -21.5.

15.00pm – USD – Existing Home Sales (MoM) (May): Expected to remain at 0.6%.

15.00pm – USD – Philadelphia Fed Manufacturing Survey (Jun): Expected to improve to -0.2.